Windows does tend to be paranoid about the possibility of drives failing - and that's not a bad thing (much better to err on the side of caution where data is concerned). I got this same message in an old Laptop of mine about 5 years ago, so I installed Fedora on it (same hard-drive) and it's still working fine - although I only use it occasionally.

As long as you keep everything backed up, just keep using the laptop until it finally fails (or until Windows wont boot from it anymore).

Run a disk scan on it, defrag it (yes, a lot of use, but it will save use even in the short term).

> Question: will an external drive (mobile or desktop) be 'fast enough' for watching> and streaming movies?

If all you are doing is streaming / watching videos, then the external HDD should be fine (assuming you've got USB 2.0 ports on your lappy, which should be the case given age).